BREXIT is dampening UK productivity growth and this effect will likely persist “for some time”, Bank of England deputy governor Dave Ramsden has warned.

In a speech yesterday in Cambridge, Sir Dave highlighted evidence that UK business investment is being depressed by Brexit-related uncertainty.

He declared: “A range of survey results suggest that Brexit-related uncertainty is an important factor weighing on investment in the UK, despite otherwise favourable conditions for capital expenditure globally and domestically.”

And he warned: “The dampening effect of Brexit on productivity growth – both through the effect of uncertainty on business investment in the short run and through the need to anticipate and respond to post-Brexit trading relationships – is likely to continue for some time.”

Data published on Thursday by the Office for National Statistics showed business investment was flat quarter-on-quarter in the final three months of last year. The ONS revised UK growth in 2017 down from 1.8 per cent to an even-weaker 1.7 per cent.

UK growth last year was the weakest since 2012. The eurozone economy grew by 2.5 per cent, its fastest pace in a decade, in 2017.

Sir Dave, who has responsibility for markets and banking at the Bank of England, said: “If there is clarity around the transition and future trading arrangements post-Brexit, this could continue to reduce uncertainty, support business investment and lead to a stronger-than-expected pick-up in productivity growth.”

However, he added: “Monetary policy cannot offset the economic impacts of a large structural shock like Brexit.”